At its regular town council meeting on Dec. 4 the Pagosa Springs Town Council voted unanimously to approve Resolution 2012-20, giving the town manager authority to offer economic incentives to businesses that invest in local development; however, two days later, at a work session where no members of the public were present, the council also agreed to discontinue funding for three major economic development organizations.
While the town council work session on Dec. 6 was not an official meeting, and therefore no voting or decision making was allowed, no one spoke up when Town Manager David Mitchem asked if there were any objections to the “economic development” section of the budget as it was presented. This version of the budget will be officially voted on at a special meeting today at noon.
The spread sheet Town Clerk April Hessman projected on the screen in the Town Hall council chamber contained zeros in the line items for the Pagosa Springs Community Development Corporation, Seeds of Learning and the Archuleta County Education Center.
Seeds of Learning, which had requested $50,000 worth of funding, was classified as an economic development organization because Seeds Director Lynne Bridges had specified the funds would be used to lower the cost of tuition and enrollment, thereby allowing more parents to drop off their kids and go to work.
“We fall under many categories as far as why we need funding from Pagosa Springs,” Bridges explained at a Nov. 15 work session, where service organizations were given a chance to present funding requests to town council. “One of them is education, and one of them is meeting a service for families. We do economic development. We can create all the jobs in the world, but if we don’t have anyone left here to work in those positions, then what’s the point?”
Bridges had made the same request for $50,000 from the Board of County Commissioners and Archuleta School District 50 Joint, and while the BoCC has set aside $50,000 in its budget for general economic development, without specifically awarding it to any one organization, the District 50 Jt. board did grant Seeds the full $50,000, as requested.
The ACEC, which had asked for $25,000 in funding, is considered an economic development organization because it offers training such as first aid or GED classes that help people obtain jobs or promotions at their jobs.
“Our expenses are slightly up, but our income is way down,” ACEC’s acting board president Dave Richardson explained to town council, “The big issue that we have is in after-school tutoring. That’s the only program we have that has no revenue associated with it. If we don’t get funding to cover that, we will have to cut that program, and that will be a real hardship on a lot of kids. That explains the short-term problem we have.
“The long-term problem we have is we have been unable to continue to raise enough money to run the organization,” said Richardson. “There are two reasons for that. One is grant money is a lot harder to come by now than it used to be.
“The other reason is, once upon a time (four years ago and before), the school district allocated some fifty to sixty students to our alternative high school. When the students come they bring with them their PPOR (the amount of money the state gives for each student). That money can be used for both the direct program expense, and also for the operating expense of the facility; grant money can’t, so we used that money to run our facility, just like the school district does.
“Now we only get three to four students, and the PPOR for those students doesn’t begin to cover our expenses for the facility.”
The CDC, which asked for $100,000 worth of funding, provides counseling and classes to business owners and entrepreneurs through partnerships with the Chamber of Commerce and the Small Business Development Center at Fort Lewis College.
Ironically, these business classes are specifically mentioned in the resolution the town council passed at its earlier meeting, although the economic incentive program this resolution is based on dates back to a time before the CDC replaced the Archuleta County Economic Development Association (AEDA).
Section 5 of Resolution 2012-20, which is titled Existing Business Capacity Building, states, “The town manager is authorized to provide a rebate of up to 25 percent of new town received sales tax/lodgers tax rebate on new/expanded sales/bookings for existing businesses owners that complete Marketing for Smarties, Business Finance, Customer Service and one other Chamber or Archuleta County Economic Development Association (AEDA) course.”
“Just for clarification,” council member David Schanzenbaker said at the Dec. 4 meeting, “I noticed there are a couple of references to the AEDA in here that we should probably take out since that organization is no longer viable. Does the CDC have courses that would be compatible or consistent with the AEDA courses that are mentioned?”
“Yes, and actually the user chart in the very back,” town planner James Dickhoff answered, “addresses the specific courses. They’re not necessarily CDC; they’re CDC courses, Chamber courses and also some courses out of Fort Lewis College.”
“Also, what kind of outreach do we have,” Schanzenbaker pressed, “to let businesses know we have these incentives in place?”
“As folks come in for business licenses we explain the program to them,” Dickhoff responded. “The CDC is explaining the program to folks that are enquiring there, and the Chamber is doing the same, so it is mostly word of mouth.”
“Do you know approximately how many businesses we’ve had take advantage of our incentives over the last three years?”council member Don Volger asked.
While Hessman responded that only four or five businesses had taken advantage of the program in the last three years, Dickhoff gave a slightly more optimistic guess of up to eight.
“Some existing business have decided,” Dickhoff explained, “because it is incremental for existing businesses, sometimes their increase isn’t substantial enough for them to go through the hard work of collecting all that paperwork to hand in if they are only going to get a 25 or 50 dollar rebate.”
Besides offering tax rebates to businesses for taking certain classes, the resolution also rewards business owners who create new jobs, increase their retail sales by becoming more efficient, focus on primary employment by having at least 50 percent of their sales occur outside of the community, or develop more business downtown.
Section 7 of the resolution states, “The town manager is authorized to provide a rebate of up to 50 percent of the town’s portion of retail sales tax and lodgers tax generated by an expansion of an existing business (e.g.: 25 percent increase in floor area or 25 percent increase in employment) or opening a new business that employs community residents, for development in downtown Pagosa Springs, or one and one half miles east and one and one half miles west along Hwy 160 from the intersection of Hot Springs Blvd and Hwy 160 and within the town boundaries to the north and south.”
“I just had one other thought,” Schanzenbaker added. “I was wondering if maybe we could restructure the downtown development section to encourage a downtown grocery store. Maybe we should not have the square footage limits in the downtown area for these rebates.”
Schanzenbaker was referring to a part of the resolution that states, “Unless approved by the Town Council, incentive packages/rebates shall only be available for facilities of less than 25,000 square feet.” This would exclude Wal-Mart, which has proposed building a 92,000 square foot “big box” store in uptown Pagosa Springs, from receiving any tax rebates.
In his written introduction to Resolution 2012-20, Mitchem explained the history of the town’s economic incentives. “To promote growth in our community’s economy and to establish a pro-business and pro-development climate in the Town of Pagosa Springs, in September of 2009, the Town Council implemented a portfolio of incentives to encourage public/private partnerships that advance economic development.”
Besides the above-mentioned tax rebate program, the town also waived all building, planning and impact fees from 2009 through 2010, then cut the fees in half through 2011. It also offered developers a 25-percent sales tax rebate on all locally purchased construction supplies and for hiring local labor. The building fee abatement ended in January of 2012, and is not continued in the current resolution.